ECN 340 Lecture Notes - Human Behaviour, Rationality

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26 Mar 2011
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The Economics of Human Behaviour
Meaning of Economics:
Thought process, or the unique manner in which we approach problems
A mental skill that incorporates a special view of human behaviour
Arises because of (a) Unlimited desires, and (b) Limited resources to satisfy those desires
Desires are not always material things (time, life partner, etc)
Minimize desires to attain them; maximize resources to attain desires
People exchange goods and services
Abstractions:
Simplification
Theory and models
Acceptability – Explains and predicts
Thinking About Values:
Amoral approach – Not passing judgement onto others
Devoid of our own values
Understanding behaviour of others given their values
Thinking About People:
Focus is the individual
Individuals have values, makes choices and take actions
Social goals reflect individual values
Actions not determined by group/society; though can be influenced
Thinking About Rationality:
Human beings act with a purpose
Purpose is to improve their lot: Maximize satisfaction
There are constraints – Environment, social, biological, etc.
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